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Hey, I'm Cramer. Welcome to Mad Money. Welcome to Crime America. Friends, hey, I'm just trying to make a couple of bucks here. My job is not just to educate, but to do some entertaining. Call me 1-800-743-CBC. Tweet me at Jim Cramer. Stocks go down
for all sorts of reasons. Some good, some bad. Lately, we've had a lot of bad. And tonight, I want to straighten some things out — not to tell you to buy, but only just to describe some things that have gone wrong
so you understand what's causing a lot of good stuff to go down. Why does that matter? Because a bad tape causes individuals to dump great stocks, usually when they should be buying more or at least standing pat. I know a lot of people are getting very worried. The war has sapped their thinking. The endless attempts by the president to tell us the negotiations are going so well, only to hear nothing from the Iranians, has caused a real gloom
that has put a black cloud over the market.
Moments like these are why I wrote "How to Make Money in Any Market." Because the key to great wealth creation is identifying winners and then, crucially, sticking with them through periods like right now. Sticking with them when everyone else is fooled into selling, or thinks the game is rigged, or the game is over. It's not. Today we saw a bit of rationality. Oil went up $5. The Dow still managed to gain 50 points. The other averages, after starting relatively strong, ultimately gave up their gains. With the S&P dipping 39%, the NASDAQ 73%, the latter almost trades 100% with oil. And you know, I think that 20% decline with this much oil is very reasonable for stocks. Tough. Now, we did see some terrific do-overs. There's a bunch of stocks that rallied that were crushed last week, but the fact is we're in the grips of a powerful bear market, at least for many tech stocks, and it doesn't take much to knock these down at all. I want to start with cybersecurity, and I heard about it all day. And not well — I didn't hear about anybody getting it right. So let me just — I'm not — it's not out of hubris. I just have to explain it. There's a private company. It's called Anthropic. They're developing an AI model with unchecked agentic abilities that theoretically could have tremendous cybersecurity powers. Given the strength of Claude, the market believes this new offering from Anthropic will be devastating for the two preeminent cybersecurity stocks, Palo Alto Networks and CrowdStrike, both of which we, fortunately or unfortunately, depending upon the day, own for the Cramer Trust. For a while, people seemed to be under the impression that with Anthropic's new agents, we might not need traditional cybersecurity at all. Now, that is just dead wrong.
In reality, the rise of AI should be a tailwind. That means good for Palo Alto and CrowdStrike, because these same AI agents can be programmed by hackers to take over your network very easily. They are the vulnerability. Without the help of traditional cybersecurity, you're more vulnerable than ever. George Kurtz, the CEO of CrowdStrike, said as much when he came on the show last Wednesday. I remember listening to him and he was saying, "Look, you know, this is really good for us." Now, George has been straight with us all along. Well, you don't suddenly start lying. You don't do that. Nikesh Arora, the CEO of Palo Alto, he's been bullish for ages. He just bought — well, he didn't have to put in a bunch of statements as much as he bought $10 million worth of his own stock in the open market on Friday. I don't think a CEO would buy $10 million worth of stock if he thought AI was an existential threat to the business model. Would he be doing that if Anthropic was going to wipe his company out? I am not saying these stocks should go right back up. It's too hard a market for that. I am saying now you know at least why they went down. Next, we're going to talk memory stocks. Oh, everyone's giving up on those, right? Last week, we learned that Google has something that could make it possible for computers to use less memory. Well, this may or may not be true. It destroyed the entire cohort.
Micron, Western Digital — wow, getting obliterated.
Carnage was non-stop. Charal House. I wish that there was some gravitas to Google's memory device killer, though, because I'm not buying it. Why? Because Google was down when it was announced. If this were for real, Google stock should have roared instead of going down. Still, the memory stocks were up so much going into last week that they were due for a pullback. Remember, they went parabolic. What do we think about parabolic moves?
But if this turns into a bear market, they're clearly not done going down. All right, let me give you one more example, and this one's more complex. The lawsuits brought by the typical class action lawyers to extract big money out of enterprises that may or may not be responsible for bad things. Meta lost two cases in a row last week. One in New Mexico, which said, among other things, that Meta prioritized profit over safety, and another in California that said Meta and Google were negligent because they failed to warn users about the addictive nature of their platforms. The plaintiff who claimed to be addicted to social media was rewarded with $6 million, with Meta responsible for 70% of the damages. Both were tried in state, not federal, courts. The marketplace doesn't know how to handle lawsuits. So, let me give you a little primer on what's going to happen here. First, arguably Meta lost about $200 billion in market capitalization. These verdicts — besides the New Mexico verdict, $375 million — seemed really devastating. The California case made people think that Meta would now be a honeypot for any young person who can demonstrate social media addiction. Special notion of the case: it got around Section 230. That's the unique protection that online publishers have by attacking the process of how content is made. The plaintiffs have juicy emails that can be reused endlessly. And some of this stuff looks very bad to a jury.
Both cases gave the appearance that the plaintiffs can run the table with the emails, but there's context to the messages, and that context will make it much easier for Meta to win these cases when it comes to appeal. Now, I know that these two losses were devastating to the shareholders who fled in droves, but I've followed these kinds of lawsuits all my life, and I can tell you that when these cases get to the federal courts rather than in the states, there's a very good chance it's going to be overturned. Why? First of all, the defendants are incredibly sympathetic — something that appeals to ordinary judges and certainly definitely to the juries, but they will play no role at the federal appellate level, which is where I think these cases are going. No jury. At the end of the day, when you sue social media companies for your depression, you're going to eventually have to prove that it was Meta's fault. Very hard to do. Any individual has a ton of potential reasons to be depressed. This is not like big tobacco. We all knew smoking causes lung cancer, including the tobacco companies, even as they denied the leakage for decades. Meta can prove that it wasn't the only precipitant. So each case will have to be done on the merits, and that's too expensive for the plaintiffs to do. I know these two cases seem existential to the health of Meta. But before you begin to believe that, remember what happened with the stock of Johnson & Johnson and the talc cases, where plaintiffs claimed there was some baby powder that caused cancer. The plaintiffs brought up memos that showed there were people at J&J who knew about the asbestos. The defendants argued that diligent people within the company had to ask about whether there was asbestos in talc. They presented the memos as devil's advocate notions. Meanwhile, moreover, it became harder and harder to prove that J&J was a bad actor. So then it began to win a lot of cases. The stock has moved up about 100 points. 100 points
since it became clear that J&J's baby powder was not tobacco. Bad time to sell, good time to buy. I bet these Meta lawsuits play out the same way. And that's without even getting into the free speech defense, which is also incredibly strong. That's why I thought the selloff based on these lawsuits was strange, wrong, maybe even ridiculous. Don't let your hatred of Instagram and what it can do to young people blind you to the buying opportunity. Remember, people have the right to log off, too. You know, there's like a First Amendment right to not watching. No one is forcing you to scroll through social media. It's different people, but this is a horrible market and all the bad things are made worse. Let me give the bottom line. Sometimes stocks sell off for bad reasons or fully bogus reasons. And at those moments, I'd rather be a buyer than a seller of CrowdStrike or Meta. At some point, I'd be willing to bless the memory stocks, too. But they need to cool off some more before I'm willing to stick my neck out, because this is such a — it's become such a horrible stock market. Let's go to Tiffany in Florida, please. Tiffany.
Hi, Tiffany. How are you?
I'm good. So, with everything happening in the airline industry right now, like travel demand shifts and TSA delays across the country, do you think JetBlue is positioned well here, or is this still a risky space to be in?
Too risky for me. I know down four seems like a — look, it's a dice roll, and I don't like dice rolls. I've got a lot of stocks that I think the fundamentals are better than. So, I'm going to pass on that one. How about Paul in Texas? Paul.
Yeah. I'd like to thank you for the segment you did about three weeks ago in reference to companies that could be hurt by AI.
And I've been looking at a company and it keeps coming across my mind. So, I figured I'd holler at you, see if you could give me any more information — whether they would be hurt or helped by AI — and the company is Automatic Data Processing.
You know, I have to tell you, Paul, this is a great question because I spent the weekend going over the ones that I think are really being killed. I don't think they can be easily taken down because you need them when you go in front of the IRS. But you know what? It doesn't matter, Paul. People have decided that this company can be disenfranchised, just like Paychex. So they just think that people can create programs that tell you more. And also, of course, they think that unemployment is going to make it so that there'll be fewer people having paychecks. I want so much to say you should buy it, but I've seen what they did to Paychex, and they can do it to Automatic Data. Right? Look, sometimes stocks sell off for bogus reasons, and then I'd rather be a buyer than a seller. CrowdStrike or Meta right here, but the war has to end, or else this market's going to keep going lower. We need oil down. No stock is going to rally big as long as oil is going higher. Now, it's a new era for ARM Holdings after the company unveiled its own AI chip last week. And I'm sitting down with the CEO to get the latest on the launch. And speaking of launches, SpaceX is one of several high-profile private companies considering a public debut this year. I'm breaking down where things stand right now with the IPO and how it may not be that well timed, given the fact that people want to run from the market rather than go to it. And Element Solutions may not be a household name, but tonight I'm telling you why the specialty chemical company deserves to be on your radar. So stay with Cramer.
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We got this huge development last week from ARM Holdings. I'm so glad we can go back and talk about it. This is one of the most important companies in the semiconductor industry. For most of its history, ARM developed key chip architecture and then licensed it to various semiconductor makers. They make a little bit of money per chip, but last week they unveiled their first in-house CPU for the data center, especially for agentic AI workloads. The stock initially roared on the news, although it's now given back some — including a 5% pullback today — but it's still up 25% year to date. That's very unusual for tech now. ARM believes its new chip business could reach $15 billion in annual sales within five years. I think it could be in excess of that, with Meta as the first major customer already. In short, this is no longer just a story about collecting royalties from chipmakers that use their technology. The company wants a larger piece of the pie. So, let's check back in with Rene Haas. He's the CEO of a brand-new ARM Holdings, as far as I'm concerned, to get a better sense of what his new chip means. Haas, welcome back to Mad Money.
Thank you, Jim. It's great to be here in person.
Yes, indeed. I'm so thrilled you're here, Rene. I talked with you out at GTC and I thought, wow, you know what? He's pretty excited about the stuff we're doing. And sure enough, yeah, the regular business is going great guns. But you have turned the model upside down. This is a new ARM, isn't it?
It is a new ARM. You know, we met at GTC a couple weeks ago. We had our announcement last week where we really have repositioned the company. We're a different company now. We have been known, as you said, for IP licensing. That business is going to continue. In fact, that business is doing great.
But we announced our first product. And what does that product mean? We are now selling chips, and it was our first product.
Our own chip. The ARM AGI CPU, built for agentic workloads. So the demand has been great right off the bat. In fact, since we announced it, the phone has been ringing off the hook. It's been amazing.
Well, I mean, tell people — I guess you have to explain to people. We all know GPUs now. We've learned that from Jensen. We know CPUs because that's x86, because that's Intel and AMD. Who are you?
So in a world where tokens need to be moved, right? If you think about agents, what do agents do? They move the tokens that the GPU or the accelerator creates. That's CPU work. It's a lot of CPU work. That's why CPU demand is exploding. What do you need with these CPUs? You want power efficiency. You want the best performance at low power. We're known for that. We're in smartphones, so of course we're going to be great at that. So the ARM AGI CPU is two times the performance at the same power compared to x86. That's why we think it's going to do great.
Okay. So very rarely do we see such a stark new player. They can't cancel their Intel and their AMD orders, I imagine. But who would re-up with them if they're hotter and not as efficient, if they can go with you?
We think there's going to be huge demand that's going to shift over to our technology. There'll be new designs that'll use ARM. That's the one with Meta, also with OpenAI that we talked about. But also, Jim, we're delivering these in industry-standard racks. What does that mean? Customers who might have bought an x86 rack to increase capacity will now say, you know what, I'm going to buy these ARM AGI CPU racks because, again, at the same power, they're two times the performance. So, we expect demand to just pick up as a result of that, which is brand new for us.
But let me play devil's advocate. You've got some great customers. I'd be pretty darn angry at you if I could compete against you.
Yeah. You know, we've heard that a few times. And first off, I would say it's a really large market. The market is very, very underserved. People want ARM technology. Give you one of the examples. We announced a customer, SAP. SAP today, they do a lot of work on Amazon, but they would love to be able to do work on Amazon using our chips at Amazon and also on their own site. They can't do that today. They can now using our AGI CPU. So, it's an and condition where there's going to be business in the cloud and also on-prem. Plenty of business for everybody.
How about these companies like Google, like Amazon that are making their own chips? Where could you play a role there?
Again, and Google's a great example, right? People will look at Google and say, "Oh, they make their own chips. They'll never buy from you, right?" But it's not a zero-sum game. Let's look at GPUs. Google does a TPU. They buy a lot of GPUs. Same model. They do a chip based on ARM-based Axion, but there may be application areas where our CPU, both in terms of availability, power, size, dimensions, may be a great area. So I expect, Jim, that our customers — Amazon, Google, Microsoft — who design their own chips continue to do so, but I think they're also great candidates for this product. And if they don't want to buy it, that's fine, too. There's a huge market.
Got it. Now I am hopeful that you may be one of the first big companies to go into the US to make them here. I understand right by now Taiwan Semi, but is there a chance that you could be the large semiconductor company that we want in our country?
We had announcements the other day. We had partnerships. We're building these chips at TSMC, but we also had Samsung stand up and say, "Hey, we're a great partner," and even Intel, right? Strange bedfellows, right? We've done a lot of work with Intel. Could this product be built at Intel on Intel technology? Certainly possible. Although right now it's all on TSMC.
Okay. Now, I don't want to look — I know you're doing so great. I don't want to — I got to mention automotive, autonomous driving. You're right there.
Oh, 100%. I mean, those are the chips today that power your automobiles, whether it's around the autonomous driving or in the instrument panel. That's all ARM-based. Those are ARM CPUs. And again, give you an example, Jim, whether it's the NVIDIA DRIVE platform or the Qualcomm DRIVE platform, those are both based on ARM CPU technology.
Now, I know that no CEO wants to be asked the following question, but the stock market's gotten really horrible. Your company's stock is up 25%. Let me put it like this. Do you think your stock is up because there's a major shift, because the other guys are just doing the same thing over and over again?
You know, I don't know. You know, sometimes looking at the stock price on a day-to-day basis is kind of like looking at your heart rate on a day-to-day basis.
Well, a lot of people have that Oura ring.
Yeah, I don't actually. And as a result, I think about the long, long term. We're doing the right things to kind of grow the business in the long term. I think people are noticing that about our company. The number I like to look at maybe is that we went public two and a half years ago. Market cap was about $50 billion, and I remember doing the road show, testing the waters. We had a lot of convincing of people to convince that we were $55 billion. You know, SoftBank bought us for $30 billion, right? So here we are two and a half years later, the number is 150, whatever it is. I think longer than that, though. We're happy so far.
